McKinsey Quarterly

Why yesterday’s channel practices won’t win over emerging-market consumers

| Article

The days have long since passed when emerging markets, the wellspring of future growth for consumer-goods companies, were backwaters where traditional channel strategies sufficed. We looked at the pricing strategies of 43 major units across 33 leading consumer-product companies in Latin America, identifying the top 25 percent. These were more successful in differentiating their prices: they maintained higher-than-average unit-price growth while increasing sales at a rate above the market average.1

We found that these companies were around 1.5 to 3.0 times more likely than their peers to deploy quantitative and advanced data-analytics approaches, such as price elasticity and conjoint surveys, to set price levels (exhibit).2 More commonplace practices, such as gathering insights from the field or reviewing price gaps against competitors, were less likely to produce a pricing edge. As consumers move up the development curve in Latin America and other emerging markets, the playing field is getting steeper, and sophisticated channel approaches will be needed if companies hope to stay ahead.

Winners rely more on quantitative and advanced data-analytics approaches to determine their pricing strategy.

To read the full article from which this article is based, see “Survey results: For packaged goods companies, winning in Latin America is worth more than you think,” on the McKinsey on Marketing & Sales website.

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